FOREX-Dollar eases vs yen, but stands mostly firm after U.S. data backs Fed view
* Yen benefits from continued fears of China credit crunch
* China still a focus even after PBOC tries to allay credit fears
TOKYO/SYDNEY, June 26 (Reuters) - The dollar turned down against the yen in Asia on Wednesday as investors warily watched China's stressed markets, but the greenback got support from U.S. economic data which backed the Federal Reserve's recovery view and bolstered U.S. Treasury yields.
"Dollar strength as U.S. bond yields rise is generally the bigger picture at the moment, certainly after last night's stronger U.S. data," said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.
"But dollar-yen is bucking that dollar-rally trend, as Asian stock markets have not fully benefited," as they remain focused on the potential credit crunch in China, she said.
Markets in Shanghai continued to slip, and Japan's Nikkei share average also gave up its gains.
The dollar index, which tracks the U.S. unit against a basket or rivals, added 0.1 percent to 82.626 , down from an earlier high of 82.698 but holding well above Tuesday's low of 82.241. On Monday, it hit a nearly three-week high of 82.841.
The dollar was slightly lower against the yen compared with late U.S. trade, buying 97.79 yen after earlier rising to a high of 98.23 yen. That was shy of Monday's two-week high of 98.70 yen but remained above Tuesday's low of 96.95 and well away from this month's trough of 93.78 hit on June 13, according to Reuters data.
Tuesday's U.S. data showed strong gains in business spending plans and a solid rise in house prices.
Last week, Fed Chairman Ben Bernanke said the central bank could start to taper its bond-buying stimulus later this year if the economy continued to recover as it expected.
The euro edged down to $1.3063 from Tuesday's session high of $1.3151, bringing into view chart support at $1.3034, a level representing the 61.8 percent retracement of its May 17-June 19 rally.
The common currency was further hampered by comments from European Central Bank President Mario Draghi, who said the bank was nowhere near exiting its accommodative monetary policy.
The diverging policy views between the ECB and the Fed could weigh on the euro against the dollar, traders said.
Commodity currencies also lost ground against the dollar, although the Australian dollar showed signs of finding a bottom following its 11-percent drop since May.
The Aussie has been further undermined by efforts by China, Australia's single biggest export market, to cool down lending.
But the Australian unit found some comfort in comments by China's central bank on Tuesday, when it assured markets it would provide cash to institutions that need it.
The Aussie slipped about 0.1 percent to $0.9245, after ending almost flat on Tuesday.
Still, it remained within touching distance of a 33-month low of $0.9145 reached on Monday, according to Reuters data. Initial support is seen at $0.9143, the 38.2 percent retracement level of its 2008 to 2011 rally.